Recently I am reading a paper by Ortner & Chassang (2018) on corruption control. It is a nice paper to read, and the idea is kinda cool.
The game is as follows. There are 3 players, a principle, a monitor, and an agent. The agent can choose to engage crime, and the principle offers a wage structure to the monitor in order to deter crime (for details, please refer to the paper if you are interested). One of the results says that, when the monitor's private cost of misreporting is strictly concave (convex) over the support, the agent is effectively risk-loving (risk-averse).
However, I do not quite understand the concept of being "effectively risk averse/loving" that they mentioned. I never saw this before. What does it mean? Does it simply mean that it is beneficial for the agent to be risk-loving?
Thanks for your clarification in advance. Please kindly provide some reference if there is any.